Sea-Land Svc. v. Barry

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit

12-7-1994

Sea-Land Svc. v. Barry
Precedential or Non-Precedential:

Docket 94-3026

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 94-3026

SEA-LAND SERVICE, INC.
Petitioner
v.

JAMES BARRY AND DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR

PETITION FOR REVIEW OF THE DECISION AND ORDER OF
THE BENEFITS REVIEW BOARD
BRB Docket No. 92-1238

Argued: August 9, 1994
Before: MANSMANN, COWEN and McKEE, Circuit Judges.

(Filed: December 7, 1994)

KEITH L. FLICKER, ESQ. (ARGUED)
RICHARD L. GARELICK, ESQ.
Flicker, Garelick & Associates
641 Lexington Avenue
New York, New York 10022

Counsel for Petitioner

JAMES R. CAMPBELL, ESQ.
EILEEN K. CAMPBELL, ESQ.
109 Lafayette Street
Suite 807
New York, New York 10013

Counsel for James Barry

THOMAS S. WILLIAMSON, JR.
Solicitor of Labor
CAROL A. DE DEO
 Associate Solicitor
JOSHUA T. GILLELAN II (ARGUED)
Senior Attorney
Office of the Solicitor
U.S. Department of Labor
S-4325 Frances Perkins Building
200 Constitution Avenue, N.W.
Washington, D.C. 20210

Counsel for the Director, OWCP

OPINION OF THE COURT

McKEE, Circuit Judge.

Sea-Land Service, Inc. seeks review of an order of the

United States Department of Labor Benefits Review Board which

affirmed the adverse decision of an Administrative Law Judge. The

ALJ held that Sea-Land was liable for a twenty percent penalty on

an overdue compensation award under § 14(f) of the Longshore and

Harbor Workers' Compensation Act, 33 U.S.C. § 901, et seq. (1988)

(the "Act" or the "LHWCA"). For the reasons that follow, we will

deny the petition for review and affirm the decision of the
Board.

I.

James Barry filed an occupational disease claim for

$4,090.51 against Sea-Land under the LHWCA. On January 2, 1991,

Sea-Land's counsel submitted a stipulation memorializing the

parties' settlement of Barry's claim to Administrative Law Judge

Ralph A. Romano who was then presiding over the matter. The ALJ
approved the terms of this settlement in an Order Approving

Settlement which was filed in the office of the district director

on Tuesday, January 15, 1991. On that same date the order was

sent to the parties by certified mail.

On Friday, January 25, 1991, a copy of the ALJ's Order

Approving Settlement was received in the office of Crawford &

Company, Sea-Land's adjuster for workers' compensation claims.

Crawford and Company made payment on Sea-Land's behalf in

accordance with the terms of settlement by a check dated January

30, 1991. The check was probably mailed to Barry the same day.1

Barry subsequently asserted that Sea-Land's payment had

been untimely and petitioned the district director to assess a

twenty percent penalty against Sea-Land under 33 U.S.C. § 914(f)

("§ 14(f)" of the Act).2 The district director granted the

request and ordered Sea-Land to pay the additional twenty percent

penalty, which amounted to $818.10. Sea-Land disputed Barry's

entitlement to the penalty, and the matter was ultimately

1 The ALJ made no finding on whether the check was mailed
the same day it was drawn; the evidence showed only that it was
Crawford & Company's usual business practice to mail such checks
on the same day the order is received in Crawford's offices.
2
Section 14(f) of the LHWCA provides in relevant part:

If any compensation, payable under the
terms of an award, is not paid within ten
days after it becomes due, there shall be
added to such unpaid compensation an amount
equal to 20 per centum thereof, . . . unless
review of the compensation order making such
award is had as provided in section 921 of
this title and an order staying payment has
been issued by the Board or the court.
referred to the Office of Administrative Law Judges for a

hearing. After conducting a formal hearing, ALJ Paul H. Teitler

issued a decision and order on March 2, 1992, in which he ruled

against Sea-Land and imposed the twenty percent penalty.

Sea-Land paid the penalty but appealed the ALJ's

decision to the Board. On December 30, 1993, the Board affirmed

the decision and order of ALJ Teitler and modified the award to

reflect Barry's entitlement to interest on the late penalty

payment. This appeal followed. We have jurisdiction under 33

U.S.C. § 921(c).

II.

We first address the Director's challenge to the

Board's jurisdiction, and thus to our jurisdiction to review the

Board's order. Section 921(b)(3) of the Act provides that “[t]he

Board shall be authorized to hear and determine appeals raising a

substantial question of law or fact taken by any party in

interest from decisions with respect to claims of employees under

this chapter . . . .” Once the Board has rendered a decision,

“[a]ny person adversely affected or aggrieved by a final order of

the Board may obtain a review of that order in the United States

court of appeals for the circuit in which the injury occurred . .

. .” 33 U.S.C. § 921(c).

The Director contends that the order imposing a penalty

under § 14(f) is a "supplementary order declaring the amount of

the default" under § 18(a). Section 18(a) provides in part as

follows:
 In case of default by the employer in
the payment of compensation due under any
award of compensation . . . the person to
whom such compensation is payable may . . .
make application to the deputy commissioner
making the compensation order [f]or a
supplementary order declaring the amount of
the default. . . . The applicant may file a
certified copy of such supplementary order
with the clerk of the Federal district court
. . . . Such supplementary order of the
deputy commissioner shall be final, and the
court shall upon the filing of the copy enter
judgment for the amount declared in default
by the supplementary order . . . . Review of
the judgment so entered may be had as in
civil suits for damages at common law.

33 U.S.C. § 918(a) (1988). The Director argues that such an

order is enforceable in district court proceedings but that such

enforcement is outside the review jurisdiction of the Board.

In essence, the Director maintains that payment under a

§ 18(a) order without initiating enforcement proceedings in the

district court constitutes a waiver of any objection to the

validity of the § 18(a) award. Thus, the Director urges that,

rather than paying the § 14(f) penalty, Sea-Land should have

refused to pay and thereby compelled the Director to enforce the

order in a district court enforcement proceeding. We disagree.

The Director's logic would require an employer to

deliberately withhold payment to a claimant in order to force

litigation in a district court. The claimant would then have to

await the outcome of that litigation before receiving his or her

payment. This result is inconsistent with the underlying

compensatory philosophy of the Act. The LHWCA seeks to protect

claimants and provide effective and expeditious compensation to
those who are entitled to it. See Strachan Shipping Co. v.

Hollis, 460 F.2d 1108, 1114 & n.9 (1972).

It would be counterproductive for us to conclude that

an employer who disagrees with a compensation order must withhold

payment thereby forcing the claimant to initiate enforcement

proceedings in order to have the validity of the award reviewed.

The purpose of the Act is to place the compensation award in the

hands of the entitled claimant as soon as possible. See id.;

Arrow Stevedore Co. v. Pillsbury, 12 F. Supp. 920, 922 (N.D. Cal.

1935); aff'd, 88 F.2d 446 (9th Cir. 1937). The Act's provision

regarding enforcement proceedings applies only "[i]f an[]

employer . . . fails to comply with a compensation order." 33

U.S.C. § 921(d). The Act provides in relevant part as follows:
If any employer or his [or her] officers
or agents fails to comply with a compensation
order making an award, that has become final,
any beneficiary of such award or the
[district director]3 making the order, may
apply for the enforcement of the order to the
Federal district court for the judicial
district in which the injury occurred.

Id. (emphasis added). The decision of the district court can

then be appealed to the appropriate court of appeals, thereby

giving two levels of appeal. However, when an employer pays the

§ 14(f) penalty in accordance with the objectives of the statute,

but disputes the validity of that award, there is no need for an

3
Pursuant to 20 C.F.R. § 702.105, the term "district director"
has been substituted for the term "deputy commissioner" which is
used in the statute.
enforcement action in a district court, and the language of the

statute does not provide for one in that instance.

Once the award has been paid, review is not available

(and is not warranted) in a district court enforcement

proceeding. Thus, we must conclude that Congress intended to

provide that an aggrieved party could pay a penalty under § 14(f)

and then challenge the propriety of the assessment of that

penalty in a proceeding brought before the Benefits Review Board.

Section 921(c) then allows the aggrieved party to appeal the

Board's decision to the appropriate court of appeals.

Accordingly, the Board properly held that it had jurisdiction to

decide this appeal from the decision of the ALJ.

III.

The central issues in this case involve the application

of the Federal Rules of Civil Procedure to the LHWCA. Rule

81(a)(6) provides that the Rules apply to "proceedings for

enforcement or review of compensation orders" under the LHWCA (§§

18 and 21 of the Act).4 Fed. R. Civ. P. 81(a)(6). That Rule is

not, however, intended to extend the scope of the Rules beyond

their intended application to "procedure in the United States

district courts in all suits of a civil nature." Fed. R. Civ. P.

4
"Although § 914 is not mentioned specifically in Rule
81(a)(6) . . . [an order based upon] `a "Section 14(f)
assessment" . . . [is] a "supplementary order declaring the
amount of the default" within the meaning of Section 18(a) of the
LHWCA.'" Quave v. Progress Marine, 912 F.2d 798, 800 (5th Cir.
1990), cert. denied, U.S. , 111 S. Ct. 2012 (1991)
(quoting Lauzon v. Strachan Shipping Co., 782 F.2d 1217, 1219
(5th Cir. 1985)).
1. Payment of the award at issue here did not involve a

"procedure in the United States district courts" and the Director

therefore argues that the Rules do not apply to the computation

of timeliness for such payment. However, we need not decide the

issue of the general applicability of the Rules to the instant

penalty assessment because, assuming arguendo that the Rules do

apply, Sea-Land still cannot prevail.

A.

Federal Rule of Civil Procedure 6(a) provides in

pertinent part:
In computing any period of time
prescribed . . . by these rules . . . the day
of the act . . . from which the designated
period of time begins to run shall not be
included. The last day of the period so
computed shall be included, unless it is a
Saturday, Sunday, or a legal holiday . . . in
which event the period runs until the end of
the next day which is not one of the
aforementioned days. When the period of time
prescribed or allowed is less than 11 days,
intermediate Saturdays, Sundays and legal
holidays shall be excluded in the
computation.

Rule 6(a) would require that five days be excluded from the

computation of timeliness.5 Accordingly, if Rule 6(a) applies,

Sea-Land would have mailed payment on the tenth day. Sea-Land

further asserts that it should be afforded an additional 3 days

5
There were five days falling either on a weekend or on a
holiday (Martin Luther King's Birthday) between Tuesday, January
15, 1991 (the date the Order Approving Settlement was filed in
the office of the district director) and Wednesday, January 30,
1991 (the date Crawford & Company issued the compensation check).
to pay Barry under Rule 6(e) and that its payment was, therefore,

timely.

Rule 6(e) provides:
Whenever a party has the right or is required
to do some act or take some proceedings
within a prescribed period after the service
of a notice or other paper upon the party and
the notice or paper is served upon the party
by mail, 3 days shall be added to the
prescribed period.

Fed. R. Civ. P. 6(e) (emphasis added). Thus, if Rule 6(e)

applies, Sea-Land would be allowed an additional 3 days for

delivery of the check to Barry. We conclude, however, that Rule

6(e) does not apply.

B.

Rule 6(e) is triggered by the requirement of "service

of a notice or other paper." There is no such condition in the

LHWCA. Section 14(f) of the Act requires that a 20 percent

penalty be added if compensation is not paid within "ten days

after it becomes due" (emphasis added). A compensation order

becomes "due" or "effective when filed in the office of the

deputy commissioner." 33 U.S.C. § 921(a). See also Lauzon v.

Strachan Shipping Co. 782 F.2d 1217, 1220 (5th Cir. 1985) ("`The

term `effective' in § 921(a) is equivalent to the terms `due' and

`due and payable' in §§ 914(f) and 918(a), respectively.'

Consequently the time for payment started running when the award

was filed, and not when [the employer] was served.") (citation

omitted). The Board correctly surmised the relevant distinction

between the language in Rule 6(e) and the requirements of §
14(f). Citing the Fifth Circuit's ruling in Lauzon, the Board

stated that "Rule 6(e) is inapplicable in cases involving Section

14(f) as it requires an action to occur within 10 days of filing

and not 10 days of service as contemplated by Rule 6(e)." Barry

v. Sea-Land Servs., Inc., 27 BRBS at 263.

Sea-Land claims that the Board erred in not considering

that the compensation order must be served on the claimant and

the employer before it is "filed" under § 19(e) of the LHWCA. In

essence, Sea-Land argues that the filing, and the service of a

compensation order, are inseparable. This interpretation is

strained as it is contrary to the plain meaning of § 19(e). See

Bethlehem Steel v. OSHA, 573 F.2d 157, 161 (3d Cir. 1978) (a

statute cannot be interpreted in a manner that strains "the plain

and natural meaning of words"). The Act does not define "filing"

but it is clear that filing and mailing are two distinct

procedures, and that service is not necessary to trigger the ten

day payment period.

Our analysis is further illuminated by the language of

the regulation implementing § 19(e). That regulation provides

that upon receipt of a compensation order from an administrative

law judge,
the district director . . . shall formally date and
file the transcript, pleadings, and compensation order
(original) in his [or her] office. Such filing shall
be accomplished by the close of business on the next
succeeding working day, and the district director
shall, on the same day as the filing was accomplished,
send by certified mail a copy of the compensation order
to the parties and to representatives of the parties,
if any.
20 C.F.R. § 702.349 (1994) (emphasis added). Thus, although the

order must be mailed on the same day that it is filed, the act of

filing the order is what triggers the employer's duty to make

payment in accordance with the order.

This interpretation is consistent with that of the

Court of Appeals for the Seventh Circuit in Jeffboat, Inc. v.

Mann, 875 F.2d 660 (7th Cir. 1989). In a similar situation, the

court in Jeffboat ruled that the thirty-day period for filing an

appeal under § 21(a) began to run on the date the judge's order

was filed in the office of the deputy commissioner; not on the

date copies of the order were mailed to the parties. Id. at 664.

Specifically, the court stated "we hold that the Deputy

Commissioner’s failure to mail a copy of the ALJ’s order to

Jeffboat’s counsel did not prevent the order from being ‘filed’

and becoming effective, and thus [the employer’s] notice of

appeal from that order was untimely.” Id. The court noted that

"the language of [20 C.F.R. § 702.349] does not make proper

mailing part of filing: the regulation mandates that the copies

be sent `on the same day as the filing was accomplished'; if

filing is not complete until copies are mailed to the parties'

representatives, the distinction would make no sense." Id. at
663. We agree.

Rule 6(e) does not apply and Sea-Land’s payment,

(though arguably mailed on the tenth day under Rule 6 (a)) was

nevertheless not timely unless Sea-Land “paid” Barry when the

check was mailed, and not when it was received by Barry.

IV.
 Sea-Land argues that compensation under the Act is

"paid" when the check is mailed not when it is received by the

claimant, and that we must reject the Board's ruling to the

contrary. We have previously stated that "`[p]ayment on a check

that is not post-dated is effective as of the date the check is

delivered," Staff Builders, Inc. v. Koschitzki, 989 F.2d 692,

695 (3d Cir. 1993).

Although we have not previously addressed this issue

directly, our determination that the “receipt rule” determines

when a claimant is “paid” under § 14(f) is consistent with prior

rulings of the Board. “[W]e note that the Board has previously

considered and rejected employer’s argument that payment should

be considered to have been made on the date the check was placed

in the mail instead of the date claimant received the check.”

Matthews v. Newport News Shipbuilding and Dry Dock Co., 22 BRBS

440, 442 (1989) (citing McKamie v. Transworld Drilling Co., 7

BRBS 315 (1978)). Although we are not bound by decisions of the

Board, they are nevertheless helpful to our present analysis.

Our analysis is also consistent with the general common

law principle that "[p]ayment is not effectuated by sending the

amount due to the creditor by mail or other public carrier until

the remittance gets into the hands of the creditor." 70 C.J.S.

Payment § 9 (1987) (footnotes omitted). As previously noted,

Sea-Land did not mail Barry's check until January 30, 1991, which

was the last possible date for payment if Rule 6(a) applies. We

assume (as did the Board) that the payment was not received on
the same day it was mailed. Accordingly, it was received beyond

the tenth day and was therefore not timely.6

We are not unsympathetic to Sea-Land’s assertion of the

unfair and often impractical results of penalizing an employer

for circumstances which may be well beyond the employer's

control. We agree that the "receipt rule" could "be impractical

and inequitable by very often placing employers in positions

where they would be exposed to the Section 14(f) penalty through

absolutely no fault of their own." Petitioner's Brief at 13.

Indeed, this case is just such an example as Barry's check was

apparently mailed on the same day that Crawford received the

order for payment.

Such equitable complaints are not new, and although we

are sympathetic, we are bound by the statute before us.

Moreover, similar complaints about the inequities of the "receipt

rule" have been rejected by other courts of appeals. In Lauzon,

the Court of Appeals for the Fifth Circuit responded to such

complaints by stating "that section 914(f) does not admit to an

exception for late payment for equitable reasons." Lauzon, 782

6
Our definition of “payment” is also informed by the New York
decisions construing that term because the compensation award was
mailed to Barry at his New York address. See South American
Petrol. Corp. v. Columbian Petrol. Co., 31 N.Y.S.2d 771, 773-74
(N.Y. Sup. Ct. 1941). Under New York law, a check is not
considered absolute payment until it is honored by the drawee
bank. Demerritt v. Levitt, 419 N.Y.S.2d 319, 320 (N.Y. App.
Div.) appeal denied 423 N.Y.S.2d 1025 (1979).
Once a check has been paid by the drawee bank, the date of
payment for purposes of timeliness relates back to the date the
check was received by the payee, not the date of mailing. Duke
v. Sun Oil Co., 320 F.2d 853, 861 (5th Cir. 1963).
F.2d at 12227 . The court held that the twenty-percent penalty

of § 914(f) is "self-executing" and automatically becomes due

upon the expiration of the ten-day period. In essence, it is a

non-discretionary penalty that applies in every instance in which

payment is overdue. See id. See also Providence Washington Ins.

Co. v. Director, OWCP, 765 F.2d 1381, 1385 (9th Cir. 1985).

It is by now axiomatic that "the judiciary may not sit

as a superlegislature to judge the wisdom or desirability of

legislative policy determinations made in areas that neither

affect fundamental rights nor proceed along suspect lines." City

of New Orleans v. Dukes, 427 U.S. 297, 303 (1976). Absent

ambiguity in the statute, we cannot allow policy to guide our

analysis. See Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842-43 (1984) (the first step in

judicial statutory construction is always to look at the text of

the statute and to stop there if the text reveals the

"unambiguously expressed intent of Congress"). We are not at

liberty to ignore the unambiguous mandate of this statute, nor

are we free to re-evaluate the relative burdens and benefits of a

balance that Congress has struck. See Long Island Oil Products
Co. v. Local 553 Pension Fund, 775 F.2d 24, 29 (2d Cir. 1985).

7
In Lauzon, the employer prepared the claimant’s check on
time and held the check at the employer’s office as an
accommodation to the claimant. When claimant failed to pick up
the check the employer called the claimant and left a message
with claimant’s wife. However, she forgot to tell claimant that
the check was ready. When the employer called back, yet again,
and offered to hand deliver the check the ten day period had
expired, and the claimant instructed his wife not to accept the
payment.
Sea-Land has justifiable complaints and fairly expresses the

inequities and problems built into this statute, but those

complaints must be addressed to Congress and not the courts.

More than ten days lapsed between the date payment

became due on January 15, 1991 and the date payment was received

by Barry. Thus, the Board's decision affirming the imposition of

the penalty was proper.

V.

Finally, Sea-Land contests the Board's decision to

award Barry post-judgment interest. Sea-Land argues that there

is no express statutory authority for an award of interest on

overdue compensation. The Director counters that the Act should

be construed to allow interest awards on overdue compensation and

urges us to affirm the Board's decision which relied upon the

ruling of the Court of Appeals for the Ninth Circuit in

Foundation Constructors, Inc. v. Director, OWCP, 950 F.2d 621

(9th Cir. 1991). There, the court held that where substantial

evidence exists to support a finding that a claimant was injured

and was entitled to disability compensation under the LHWCA, and

the employer did not timely pay the disability compensation,

interest accrued on the overdue compensation. Id. at 625. We

are in agreement with the following reasoning of the court in

Foundation Constructors:
It is a truism that a dollar tomorrow is not
worth as much as a dollar today. Allowing an
employer to delay compensation payments
interest-free would reduce the worth of such
payments to the claimant, undermining the
remedial intent of the Act. We believe that
the Director's construction that interest may
 be required on past-due compensation is
reasonable and consistent with the ends of
the Act.

Id. See also Quave v. Progress Marine, 912 F.2d 798, 801 (5th

Cir. 1990), cert. denied, U.S. , 111 S. Ct. 2012 (1991);

Newport News Shipbuilding & Dry Dock v. Director, OWCP, 594 F.2d

986, 987 (4th Cir. 1979). Accordingly, we uphold the Board's

award of interest to Barry.

VI.

For the reasons stated above, we will deny the petition

for review of the Board's decision. In doing so, however, we can

only hope that Congress will address the problems built into this

statute. AFFIRMED.